Canceling Private Mortgage Insurance

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Although lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets below 78% of the price of purchase, they do not have to cancel automatically if the equity is more than 22%. (The law does not include certain higher risk mortgages.) But you are able to cancel PMI yourself (for mortgage loans closed past July 1999) once your equity gets to 20 percent, without consideration of the original purchase price.

Do your homework

Familiarize yourself with your loan statements to keep a running total of principal payments. Also stay aware of the price that other homes are selling for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't begun to pay a lot of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

When you find you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be required to submit documentation that you have at least 20 percent equity. You can acquire proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

Pacificwide Lending can help find out if you can eliminate your PMI. Give us a call at 925-461-0500.

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